With the growing dependence on remote and electronic
forms of communications to maintain their competitive business advantages, many professional firms have incorporated
the very popular BlackBerry line of wireless e-mail and paging systems into their daily business operations.

Among its many specialized applications, the BlackBerry
system allows users to send and receive e-mails without
physically accessing a computer, thereby dispensing with the
need to tow laptops or locate a dial-up Internet service for
this purpose. In a short time, the mobile device has become
infamously addictive, even earning the moniker "Crack-Berry". However, recent rulings from the leading U.S. court
on patent law and the U.S. Supreme Court have renewed the
possibility that U.S. service to the versatile BlackBerry may
be halted.

On October 26, 2005, newly appointed Chief Justice John
Roberts denied Research In Motion's (RIM) last-minute
attempt to stay a patent-infringement judgment against it.
That judgment could now prohibit RIM from selling or providing its BlackBerry handhelds and server software to over a
million users in the United States. This high-profile patent
lawsuit is not over, as the case heads up to the U.S. Supreme
Court and down to the District Court for further proceedings.
Its resolution may have a significant impact on businesses
across the United States.

The Legal Background

In November 2001, NTP, a small Virginia-based intellectual property holding company, filed suit in Virginia against RIM, the Canadian manufacturer of the BlackBerry, alleging that several of its
patents had been infringed by various configurations of the
BlackBerry system. The technology at issue related to systems
for integrating existing electronic mail systems with radio frequency wireless communication networks, to enable a mobile
user to receive e-mail over a wireless network.

In August 2003, the District Court awarded NTP monetary damages totaling $53.7 million. The court also issued a permanent
injunction against RIM, enjoining it from selling, using, or importing its accused BlackBerry systems, software, and handhelds in
the United States. The injunction was stayed pending a federal
appeal.

The Legal Battle In the Appellate Court and
U.S. Supreme Court

In December 2004, the U.S. Court of Appeals for the Federal Circuit in Washington, an intermediate court which oversees all patent appeals in the United States, upheld the District Court's
ruling that RIM's Blackberry devices infringe several NTP patents.
At that time, however, the Federal Circuit granted RIM permission to continue to market the services in dispute while the case
was remanded to the District Court for further review. RIM thereafter filed a petition to rehear the appeal.

In March 2005, prior to the Federal Circuit's reconsideration of its
December 2004 opinion, RIM announced that it had reached a
$450 million settlement with NTP that appeared to end the protracted dispute. In June 2005, RIM went back to the District
Court to enforce the agreement amid signs it was beginning to
unravel. The deal subsequently collapsed, with each side accusing the other of adding unacceptable conditions. The battle continued in the appellate courts.

In August 2005, a three-judge panel of the Federal Circuit withdrew its December 2004 opinion and definitively upheld some
parts and struck down other parts of the District Court's ruling.
Specifically, the Federal Circuit opined that RIM had indeed violated seven of the patents under consideration. However, the
Federal Circuit concluded that the District Court had wrongly
construed the term "originating processor", which it defined as "a
processor in an electronic mail system that initiates the transmission of a message into the system."

As a result, it upheld the infringement rulings with respect to the
claims that do not contain an "originating processor" limitation,
but vacated the rulings for those that contain the "originating processor" limitation. The Federal Circuit therefore returned the case
to the District Court for further arguments over the claims that
may have been affected by the flawed definition.

En Banc Review Sought

In the interim, the Federal Circuit stayed the permanent injunction
against RIM, ordering the District Court to revise the 2003 injunction to reflect decisions made on appeal. RIM, however,
appealed again, asking that all twelve judges of the Federal Court
(referred to as an en banc request) reconsider the case.

On October 10, 2005, the Federal Circuit refused to rehear RIM's
en banc request and on October 21, the Federal Circuit further
refused RIM's request to suspend the patent-infringement lawsuit while RIM appealed the case to the U.S. Supreme Court.
RIM immediately filed an emergency appeal with the Supreme
Court, asking to suspend the District Court's judgment before
RIM exhausts its appellate options.

On October 26, the Supreme Court denied without comment
RIM's request, prompting many to consider whether this latest
setback would forecast the end of the road for RIM. Others,
however, point out that the court rulings simply mean the case
will now return to the District Court in Virginia for further arguments on the merits of some of the patent claims and a decision
on whether to impose the injunction.

Ordinarily, imposing such an injunction would likely take
many weeks, if not months, making an immediate end to
BlackBerry service unlikely. Nonetheless, since about 75
percent of RIM's business is reportedly in the U.S. market, any termination of operations would be a serious impediment to RIM.

The District Court will also reconsider a dispute over whether
the companies reached a valid and binding settlement in
March 2005. RIM is expected to renew its request that the
trial court enforce the terms of the settlement, and is
expected to argue against an injunction by pointing out that it
agreed to settle the case months ago. NTP, on the other
hand, has maintained that the companies failed to reach a
definitive agreement over licensing terms for the patents in
dispute.

RIM also announced that it plans to appeal the Federal Circuit decision to the U.S. Supreme Court, arguing that the
case "raises significant national and international issues warranting further appellate review." In particular, RIM has
argued that U.S. patent law should not apply because the
controlling BlackBerry software is found on computers in
Canada – beyond the jurisdiction of U.S. courts. According to
RIM, this case pushes United States laws beyond the country's borders, because the disputed e-mail software at its
heart resides only on servers near the company's head office
in Canada. It is unknown whether and when the Supreme
Court will decide to review this case.

USPTO Re-examination of the Disputed Patents

Following the District Court's 2003 judgment, the United
States Patent and Trademark Office (USPTO) initiated an independent re-examination of several of NTP's patents at
issue in the lawsuit. While the re-examination process has
not been completed, the USPTO recently cast doubt on all
eight of the patents involved in the dispute, issuing a preliminary rejection of a key patent in the case.

If all eight NTP patents being re-examined are eventually
overturned, NTP's court case against RIM would be null and
void. NTP has dismissed the USPTO rulings as a common
formality in the agency's lengthy review process and is
expected to appeal that decision. NTP can respond to the
preliminary ruling, after which the USPTO will issue a final
ruling.

It is unclear what impact, if any, this development might have
on any settlement negotiations between RIM and NTP. NTP
has said that it will ask the District Court to confirm the permanent injunction. RIM Co-Chief Executive Jim Balsillie has
maintained that RIM has a "workaround" technology
designed to avoid the patents in question and that RIM is
"committed to supporting its market and supporting its
customers".

RIM will hope that the USPTO rulings, which are independent of the litigation process, will boost its arguments before
the trial court against re-issuing an injunction until a final ruling by the USPTO. In the meantime, BlackBerry users
remain tuned to the highly anticipated outcome of this
lawsuit.

By Andres F. Quintana and Shirley
S. Dloomy. Andres F,
Quintana is a litigation and intellectual property partner at
the Beverly Hills, California-based Ervin, Cohen & Jessup,
LLP. He may be reached at aquintana@ecjlaw.com. Shirley
S. Dloomy is a former litigation associate at Ervin, Cohen &
Jessup LLP and will be joining the litigation department at
Goldfarb, Levy, Eran & Co. in Tel Aviv, Israel.